When Green REIT put itself up for sale last April, a leading REIT chief executive told me, somewhat euphemistically, that it was “a sign”.


If a canny investor like Green REIT was cashing in its chips, could it be that the long Irish commercial property boom was about to turn sour? Now, bears fearful of a downturn can point to another sign. Last Friday, Aviva stopped investors from withdrawing money from two of its Irish property funds following a spate of redemption requests.

There are certainly good reasons for thinking that the best years of the boom have passed. Irish commercial property delivered a return of 5.3% last year, getting on for half the levels reported for 2018, according to the MSCI/SCSI Ireland Quarterly Property Index. The outlook for the retail market is undoubtedly a cause for concern. Yields softened last year and although occupier demand remains far stronger than in the UK, it would be no great surprise if that were to change. And in the office market, the level to which yields have tightened is reason to be cautious, at the very least.

However, it is not all doom and gloom. Barely a week seems to go by without another global technology company taking office space in Dublin, with deal sizes regularly topping the 100,000 sq ft mark. Just under a month ago, IPUT completed a whopping 430,000 sq ft pre-let to LinkedIn at its Wilton Park scheme. Continued demand from occupiers like this is likely to keep rents buoyant. In its annual review this week, local agent HWBC predicted that prime Dublin city centre office rents would remain at around €65/sq ft and that in the suburban market, grade-A rents would tick up.

My hunch is that the investors that pulled out of the Aviva funds did so because they felt better returns could be achieved elsewhere, not because they expected the market to crash. While double-digit returns may not be achieved in 2020, neither does it seem likely that values will slump.

The next barometer of investor sentiment will be Henderson Park’s sale of five of the Dublin office assets it acquired as part of its purchase of Green REIT last year. Its plan is to redeploy the capital into the development of other assets in the Green REIT portfolio. If Henderson Park succeeds in shifting the properties in line with the €400m-plus asking price, then it will be firmly on track to making a success of its €1.34bn Green REIT deal.

Rising to the challenge

We’ve been delighted by the response to The Climate Crisis Challenge. The social media buzz surrounding the campaign, launched in partnership with the UK Green Building Council, reflects both the importance of the issue and the desire in the industry to reduce real estate’s carbon footprint.

It is encouraging to see more and more companies making environmental commitments, even in parts of the market that have hitherto been slow to embrace the climate agenda. Just this week, Barratt Developments set a target to slash its carbon emissions in operation by a third by 2025.

We’re looking forward to hearing more about what people are doing to rise to The Climate Crisis Challenge.